Why coal has to go - Part 2

By allowing their industry association to continue peddling misinformation, directors of coal companies appear in serious breach of their fiduciary responsibility.

This is part two of a two-part analysis. Part one can be found here.

As a result of our inaction, it is inevitable that the world will now overshoot the 2 degrees Celsius temperature target, which is itself too high given current evidence of climate change at the 0.8 degree Celsius we have already experienced. Thus not only must we rapidly reduce emissions to counteract the overshoot, we also have to draw down legacy carbon already in the atmosphere.   

Sensible risk management dictates that the only way now to avoid catastrophic climate change, is to immediately halt any new high-carbon developments and to initiate emergency action by placing our economy on a war-footing, rapidly implementing zero carbon solutions with our remaining carbon budget. Akin to the manner in which economies were restructured in the lead up to WW2. 

Coal has the highest carbon emissions per unit of energy of any fossil-fuel. In the absence of viable means of capturing and storing these emissions, the Australian coal industry must be phased out, along with others around the world.

It is the height of arrogance and irresponsibility for the Australian Coal Association to justify its continued expansion on the grounds that it is essential for poverty alleviation.

If the developing world follows a high-carbon energy path, poorer people will be disproportionately hit by climate change with devastating consequences, a reality the Chinese and Indians are now acting on. Every new fossil-fuel project represents death and destruction for communities somewhere in the world, Australia included.

ACA and the Minerals Council claim there are no viable alternatives to coal. Utter nonsense; there are any number of solutions emerging, which of course have risks, uncertainties and economic costs to be assessed realistically. But if the true cost of using coal was factored into its pricing, and the subsidies it continues to receive were removed, many of these alternatives would already be far cheaper, as well as environmentally superior. The transition to a zero-carbon economy will not be easy, but that has to be set against the far worse implications of continuing to rely upon, and expand, the coal industry.

Dr Williams claims that: ‘if we don’t have a solution for coal use, ---, we don’t have a solution for climate change“, citing support from “every major entity including the World Bank, the IEA and the IPCC.” Not so.

Major entities, including the World Bank, IMF, UN, OECD, IEA, are saying exactly the opposite.  She goes on to misrepresent the IEA 2012 World Energy Outlook, where it states that “Coal will remain the backbone fuel for electricity generation globally”.  

The IEA projections are scenarios, not predictions; they outline what might happen if the adopted assumptions are followed; they are not a justification for expanding coal use. On the contrary, the IEA has continually warned that, under current policies, the world is on track for a 6 degrees Celsius temperature increase. The above quote relates to a scenario with slightly improved policies which would produce 3.5 degrees Celsius warming. Both outcomes would be catastrophic and must be avoided.

The IEA in its most recent publication has reinforced the need for far more rapid action on emissions reduction, but is still being prevented from stating the speed of change that is really needed, and clings to unrealistic expectations of official solutions such as CCS.

As Machiavelli put it: “There is nothing more difficult to handle, more doubtful of success, and more dangerous to carry through than initiating change. The innovator makes enemies of all those who prosper under the old order, and only lukewarm support is forthcoming from those who would prosper under the new.”  

The old order is alive and well in our coal industry. The industry has been well aware for years that carbon emissions from coal consumption would, at some stage, become a major constraint on its future. That time has now come.

Every major coal company, in corporate responsibility and sustainability policies, pays lip service to the proposition that climate change is a serious issue that needs to be addressed urgently. In practice, those same companies, via their proxies such as the ACA and the MC, have dedicated vast resources to successfully preventing the introduction of sensible climate change policy in Australia.

As a result even the minimalist policies that have been introduced, such as carbon pricing and emissions trading, have been totally emasculated. By so doing, the coal industry has eliminated options which would have allowed a far easier transition to a zero-carbon future. 

The cost to Australia will be huge, giving every justification for the withdrawal of the industry’s social licence to operate, along with those of its bankers and insurers.

This campaign continues with the ACA’s latest attempt to justify its existence, by using outmoded 20th Century economic and trade analysis which completely ignores the catastrophic risks which coal expansion has already created

By allowing their proxies in ACA to continue such misinformation, directors of coal companies are in serious breach of their fiduciary responsibility to objectively assess the risks to which their companies are exposed, and which they are creating, and take action to mitigate those risks. 

It is time the attack dogs of the industry associations were defanged and those directors took personal responsibility to explain to the Australian community why they are intent on inflicting such catastrophic risk upon us.

As Ross Garnaut said in his 2008 Climate Change Review: “The most costly and damaging policy for Australia would be to implement a policy that was designed to appear meaningful, but was largely meaningless in application.” That is exactly what the coal industry has delivered.

The coal industry has enormous skills and expertise which will be essential in creating our zero-carbon future. The leadership of the industry needs to wake up to reality and intelligently plan the phase out of coal, and the redirection of its resources to build this future. 

We have little time to make the transition, but we have solutions. Australia has enormous ingenuity, zero-carbon resources and opportunities, but only if we are honest about the real challenges and initiate emergency action to meet them.

Dr Williams calls for: “an informed debate about the full dimension of the challenges and solutions to the energy/climate change conundrum.” Just so, bring it on!

Ian Dunlop is a former an international oil, gas and coal industry executive.  He chaired the Australian Coal Association in 1987-88, chaired the Australian Greenhouse Office Experts Group on Emissions Trading from 1998-2000 and was CEO of the Australian Institute of Company Directors from 1997-2001.